New bank charge to start

 

Dar es Salaam. The burden of a failed consensus between the Tanzania Bankers Association (TBA) and the ministry of Finance on the newly imposed excise duty on money transfers through banks now falls into the hands of customers.

From September this year, banks will start charging their customers the 0.15 per cent excise duty on all money transfers for the amount exceeding Sh30,000, though there are still some contradictions and confusion on how the process is to be executed.

This comes as banks are struggling to find out a mechanism that will help them to identify which money transfers should be taxed and those that should not.

According to TBA, even though the government has given out the directive, it has not clearly analysed the mechanisms due to be used on the process.

CRDB Bank deputy managing director Estha Kitoka told The Citizen on Sunday by phone that banks were requesting the government to give a clear clarification on the tax base; what should be taxed or should not be taxed.

The Finance Act 2013, which was published in the Government Gazette of July 5, excludes charging excise duty on money transferred between banks and financial institutions, government, diplomats and diplomatic missions, this, according to TBA is tricky in executing through the current systems of money transfers.

“We have written a letter to TRA [Tanzania Revenue Authority] and the ministry of Finance to seek clarification on the scope and implementation of the new requirements, but the ministry has maintained its stance that charges should be as from July 1, 2013, when the law came into effect,” she said.

“We need to adjust our systems so that they can be able to identify the taxable and non-taxable money transfers to avoid manual checkups. This requires enough time for preparations, and the government should give us enough time to set our systems.” She added that banks will have to backdate charges as from July 1, 2013 something which is very cumbersome for banks.

On the other hand, banks have already started communicating with their customers on the move to start charging the 0.15 excise duty on all money transfers for the amount exceeding Sh30,000.

According to the communication made available to its customers, Standards Chartered Bank Tanzania Limited, for example, will start executing the 0.15 per cent charges from August 28, 2013.

It said: “following our earlier communication with you, please be informed that, in compliance with the newly introduced Finance Act, on August 28, 2013, we will start charging the 0.15 per cent excise duty on all money transfers for the amount exceeding Sh30,000 or the equivalent in any other currency.”

“In addition, as required by TRA, we will seek to recover the excise duty for the month of July 2013 by debiting your account on all relevant transfers,” says the communication signed by Liz Lloyd, the chief executive officer of the Standard Chartered Bank Tanzania Limited.